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Democrats’ Comments Spark Tax Cut Debate

WASHINGTON — Congressional Republicans pounced Wednesday on disputed comments from Bill Clinton and a former senior Obama economic adviser, claiming that the Republican push to extend all of the Bush-era tax cuts beyond the 2012 expiration date has support at the highest levels of the Democratic Party.

White House officials and Congressional Democrats responded just as vigorously, saying neither the former president nor Lawrence H. Summers, a past director of the National Economic Council, ever said that all of the tax cuts should be extended.

The heated exchange illustrated how politically sensitive the tax cut expiration has become amid fresh data showing the economy slowing. A majority of voters say the federal budget deficit should be tackled with a mix of spending cuts and tax increases on the rich. In an April New York Times/CBS News poll, 56 percent favored boosting the economy by spending on education and infrastructure while raising taxes on the wealthy, against 37 percent who favored cutting taxes and spending.

But Republicans have stood firm against any tax increase, and they are on the offensive, thanks in part to the comments of Mr. Clinton and Mr. Summers.

“Even Bill Clinton came out for it, before he was against it,” Speaker John A. Boehner of Ohio said.

Both Democrats released statements shortly after their televised interviews denying they had said that they favored extending all the tax cuts. President Obama has endorsed extending tax cuts for the middle class, but he has promised to oppose any extension of Bush-era tax cuts for households earning more than $250,000.

But after Friday’s weak jobs report for May, the Democrats have been on the defensive.

Representative Peter Welch, a Vermont Democrat who wants his party to stand its ground, said: “There’s a reason to be alarmed. Historically, economic sentiment in May predicts the outcome of presidential elections, and people are edgy.”

In the appearance on MSNBC’s “Morning Joe” that sparked the exchange, Mr. Summers appeared to signal that he favors a temporary extension of all the tax cuts. After the host, Mika Brzezinski, mentioned Mr. Clinton’s tax cut comments and the bad jobs report, she pressed Mr. Summers for his views.

He responded: “The real risk to this economy is on the side of slowdown, certainly not on the side of overheating, and that means we’ve got to make sure we don’t take gasoline out of the tank at the end of this year. That’s got to be the top priority.”

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Lawrence H. Summers said he stood by President Obama.Credit
Andrew Harrer/Bloomberg News

A few minutes later, he added, “For the medium and long term, we obviously have to do things to control the deficit,” explicitly embracing tax increases on the rich.

“You’ve got to look to the people who’ve gotten the most gains from the economy over the last 30 years, and who have also gotten the biggest tax reductions,” he said. “It’s not taking from them. It’s simply asking them to do their fair share at a time when the country has to pull together to work through some difficult problems.”

Together, the comments appeared to suggest that Mr. Summers opposed allowing any tax cuts to expire at the end of the year and preferred allowing the cuts on income above $250,000 to expire later. But he was not explicit on the issue, and White House officials denied that Mr. Summers, one of Mr. Obama’s closest economic confidants, had broken with the president.

Mr. Summers released a statement saying: “I fully support President Obama’s position on tax cuts. I have often said and continue to believe that promoting demand is the most critical short run priority for the American economy. Extending the high-income tax cut does little for demand and poses substantial problems of fairness and fiscal prudence.”

Those events mirrored the dispute over Mr. Clinton’s comments barely 12 hours before. In an interview on CNBC, Mr. Clinton appeared to say tax increases and Republican-led spending cuts should be temporarily set aside until the economy regains its footing.

“What I think we need to do is find some way to avoid the fiscal cliff, to avoid doing anything that would contract the economy now, and then deal with what’s necessary in the long term debt-reduction plans as soon as they can, which presumably would be after the election,” he said.

Mr. Clinton’s remarks were likewise vague, and a Clinton spokesman on Tuesday quickly said the former president does not believe tax cuts for the wealthy need be extended.

Regardless of intent, some damage may have been done. Senator Mitch McConnell of Kentucky, the minority leader, said President Obama extended the Bush tax cuts for two years in December 2010 because of a struggling economy. At 1.9 percent, the growth rate in the first three months of this year was slower than the end of 2010, when the economy grew 2.8 percent.

But Republicans gave no indication they are willing to cut a broad, anti-austerity deal. Representative Kevin McCarthy of California, the House majority whip, said Republicans will not come to the table until they believe they have a White House negotiating partner.

“You need somebody on the other side who wants to make a deal, and the No. 1 way to do that is to put people before politics,” he said. “And this president this year has done nothing but politics.”

A version of this article appears in print on June 7, 2012, on page A18 of the New York edition with the headline: Democrats’ Comments Spark Tax Cut Debate. Order Reprints|Today's Paper|Subscribe